Growing your business and incorporating it
Growing your business can be an exciting venture. From choosing the location of your storefront to personalizing your stationary and office space, there are several initial considerations to make.
Prior to incorporating your business name with your provincial business registry, reserving your corporate name is your initial step. A name reservation typically costs around $30-$50 depending on your province or territory, payable to the online business registry of your province. The name reservation service allows you to select up to three choices for your business name. The corporate registry will determine if your first choice is available. If your first choice of business name is not available, your second choice is offered, and so on.
Once you have selected your reserved name, your selection is available for 60 days until it expires. Some provincial/territorial registries may have shorter or longer reservation periods and setting calendar alerts will ensure that you do not lose your selected choice prior to incorporation.
Prior to incorporating your company, you should determine which formation is suitable for your business.
In Canada, there are 6 forms of business structures to choose from (of which only 4 are discussed here):
- A corporation is one of the most common business structures. A corporation is an entity of its own, with its own liabilities and obligations. The shareholders of the corporation are not liable for the debt of the corporation.
- A sole proprietorship occurs when a single person carries on the functions of the business alone. One legal requirement of the sole proprietorship is (aside from tax and licensing considerations) that if a person is engaged in business for trading, manufacturing or mining purposes, and uses a business name other than his or her own name, the person must register the business name with the corporate registrar.
- A limited partnership is either a general partnership or a limited one. A general partnership or GP occurs when partners have the same liabilities, rights and duties as partners in a typical general partnership. A limited partnership or LP occurs when partners have primarily an investor role and partners, in their capacity as limited partners are unable to participate in the day-to-day management of the limited partnership. Generally, the liability for business debts and obligations of the partnership is limited to the amount of capital invested in the partnership.
- A limited liability partnership or LLP is similar to a general partnership. A LLP maintains many of the same tax advantages and benefits as LPs, with the added benefit that the members of a LLP can take on an active role on the everyday management of the company.
Choosing the correct business structure will have major tax implications on your business. Consulting with a qualified attorney to choose the right business structure for you can save you on expenses in the future.
The incorporation process is relatively straight-forward and requires no longer than 30 minutes, dependent on whether your articles of incorporation and other corporate bylaws and documents have been drafted. If you have not yet drafted your articles of incorporation and other corporate documents, retaining a lawyer to set up your bylaws should be your next step. For assistance with this step, contact us at email@example.com to facilitate your incorporation.
Growing your company will require the consideration of a number of factors. Some of these factors include the location and nature of your business, the services offered, marketing efforts and budget, employees, staff, and independent contractors, in addition to the development and procurement of investment opportunities. If your business has the potential to garner significant investment from outside investors, you should consider offering public securities. Visit our article on going public for more information.